Posted by: Peter Burrows on November 16, 2009

Market research firm Flurry, which tracks smart phone market share by monitoring usage of thousands of mobile apps, says Motorola sold 250,000 of its Droid smart phones in the device’s first week on the market. That’s not bad. HTC’s MyTouch sold just 60,000 in its first week. And analysts believe Palm sold between 90,000 and 100,000 of its Pre smart phone when it came on the market earlier this year.

But the question is what happens to Droid sales in week two, three and those that follow—as dozens of other Android phones are expected to hit the market, as Olga Kharif points out in her story in the magazine. As of now, the device—which has gotten mostly good reviews—is benefiting from a huge marketing push from Verizon, estimated to total around $100 million. No doubt, you’ve seen the “I Don’t” ads, which clearly position Droid as a superior alternative to Apple’s iPhone.

That’s an effective advertising campaign, especially when combined with Verizon’s “there’s a map for that” ads that bust on AT&T’s reputation for spotty 3G coverage. Former Motorola CEO Ed Zander, for one, thinks Moto “has a good shot to sell a ton of Droids” if the device emerges as the gotta-have phone on the Verizon network. Indeed, if Motorola can maintain this 250,000-a-week clip for a quarter, it would move 3.25 million Droids. That would make it a blockbuster and the iPhone’s nearest rival. Apple sold 7.4 million of its iPhone 3Gs in the company’s just announced fiscal quarter. And Flurry’s Peter Farago says the firm’s data shows that Apple sold 600,000 iPhones during Droid’s debut week.

But Droid’s main competition isn’t really the iPhone: it’s fragmentation of the Android market. Clearly, Apple will have no problem keeping consumers focused on its device. The iPhone is the only smart phone Apple sells, and the company spends beaucoup bucks reinforcing a clear, powerful message: buy an iPhone, and get the benefit of Apple quality as well as those 100,000 apps in the App Store.

Now consider Motorola’s challenge. Within weeks, consumers who go into a Verizon store will have many of different phones to choose from. Many of these devices will have a different “skin”, a layer of software interface to make it stand out. That may make strategic sense on paper, but all these different interfaces is bound to confuse consumers. Also, it’s not clear to me whether all of those 12,000-plus Android apps will run on all Android devices, further muddling the message.

And Zander wonders if consumers will be put off by the complexity of the Android model. It’s bad enough with the iPhone, where Apple is responsible for the device and AT&T for the network. With Android, “are you buying from Verizon, or Google or Motorola?” While Zander thinks current Motorola CEO Sanjay Jha has done “a helluva job,” he also thinks “there are a lot of competitors in this space. It’s going to be an interesting Christmas.”

Reader Comments

Bad Eddie

November 16, 2009 2:34 PM

Put Android on a Samsung or a LG and then we have something. Razr was such a piece of junk that people are scared to buy Motorola.

youdontknowmuch

November 16, 2009 4:03 PM

You haven't seen the new Droid yet I guess. Because if you did you would have notice that its a whole different phone then the previous phones that motorola come out with. Its not even on the same level.

RG

November 16, 2009 4:20 PM

I agree with Bad Eddie---I've had such bad experiences with Motorola phones that I was not even tempted to purchase the new Droid.

Kamper

November 16, 2009 4:40 PM

The Droid will not be able to compete with the iPhone until it has more applications support. I'm locked to my iPhone because of applications that I use everyday like NeuroMobile and others and would not consider switching. The Droid handset technology is good today but it will be leapfrogged by the iPhone in its next release. New smartphone manufacturers will need to get popular iPhone apps ported to their platform to become relevant. The competition is no longer about the handset technology.

Ex Moto

November 16, 2009 4:49 PM

Why do you have to put the picture of the infamous ex-Moto clown Zander? If that was so important why not put in an image of the other clown Ron Garriques. Together they created the mess that poor Sanjay will die clearing.....Droid or not....

123xyz

November 16, 2009 5:21 PM

Moto has to show they can consistently innovate. So far it's a "one trick pony."

HopeMotoSucceeds

November 16, 2009 5:36 PM

Ed Zander is the person who single handedly guided Motorola to its current dreadful condition. He once referred to the iPhone as a "flash in the pan" and stated the RAZR icon would dominate the industry for years so Motorola didn't need to create an iPhone like product during his watch. You were so right Ed! Why would Ed Zander be interviewed as an authority on anything but failure??

Interviewing Ed Zander about a successful Motorola product is similar to interviewing the captain of the ill-fated Titanic voyage. Let's not give Ed Zander any more publicity than he deserves, since his 15 min of fame ran out years ago.

Weird

November 16, 2009 7:25 PM

Why get comments from Zander? The stupid guy screw up big time at Moto and left with big $. Make in America..

Jewish

November 16, 2009 9:48 PM

If this comment is removed because of my religon, then that will be the end of you!

siphandone

November 16, 2009 9:50 PM

That is good we have another choices beside Apple... I am waiting for Wi-Fi phone for $50... Otherwise, you ain't get my hard-earned $$...

george

November 16, 2009 10:39 PM

Why the heck would you ask the opinion of Ed Zander, the guy who brought down the company with failed strategies and inept management?

phonenut

November 16, 2009 11:26 PM

why focus on handsets with wifi, if you have to have a data plan... whats the point? at&t has coverage but big red does have the bigger 3rd gen network, got the biggest chunk of the 700mh band, and is already working on 4g lte.at this point in the game choice is mainly based on who ticked you off the most when you had their service. lol

gerrrg

November 17, 2009 5:16 AM

I'm tired of people saying that Android suffers from lack of developer support, compared to the iPhone. As the Android platform grows - and believe me, the Asian market is where this will explode - developers will move their resources away from RIM, WebOS and Symbian, and focus primarily on Windows Mobile, iPhone and Android. (Trust me, Symbian is dying from a lack of confidence and an inability to move quickly, while RIM and Palm followed the proprietary route which will doom them.)

Maybe Motorola won't be the biggest Android device maker, but it's the only one that has staked all of its resources into development of devices for the Android platform. Unlike HTC, LG, Acer, Asus and others, Motorola won't have to split their time and money on hardware and software support across several platforms. Isn't that why Apple limits the hardware on its products?

Is the Android UI clunky compared to the iPhone? I have used the iPhone and it takes some serious figuring out before you can become good at it, just as any device does. It also takes more steps to perform some tasks than you can do on an Android phone (and vice versa). From my perspective, the people that are critical of the Android UI have spent so much time using the iPhone, that they have built up a bias through their familiarity with the iPhone UI. In turn, they hold this familiarity against the Android, as if the Android was flawed for not using the same UI as Apple's.

Finally, 250K is quite a bit of units being sold in one week for any phone. But with the Android platform, it's not about any single phone. It's about a platform that allows you to remain unique while having the same UI experience across the board. In the end, I think Motorola chose the right path, to which I also say that Palm followed the wrong one.

Mike

November 17, 2009 8:54 AM

"Indeed, if Motorola can maintain this 250,000-a-week clip for a quarter, it would move 3.25 million Droids. That would make it a blockbuster and the iPhone’s nearest rival."

This statement doesn't make much sense. Sales will decline after the first couple of weeks as the initial flurry dies down.

Ron

November 17, 2009 7:26 PM

I wonder how many of the 250,000 Droids were returns? Like 1/3rd maybe?

I followed with interest this introduction, and there were just so many people returning them and not once but sometimes twice or even more. (yeah I know the drill about new products) but this was amazing 5 pages of user forums of people recommending to each other to "take it back for another -- that will fix your problems".

At first Verizon and Best Buy were not just taking them w/o a reason, but as the tide swelled, they stopped asking any questions whatsoever, just exchanged them freely.

I don't own a smartphone so I'm not on any side.

DM

November 17, 2009 7:45 PM

Droid is a great smart phone with features and capabilities that in most cases equal to or surpass those offered by the iPhone. Coupled with Verizon’s network, this offering likely constitutes the best (and the smartest) buy in today’s smart phone market. Unfortunately, I don’t believe that this will be enough to propel this phone to the top, or to maintain its present sales volume for a prolonged period of time. I think that Motorola perhaps overestimated the gain that could be achieved by differentiating this phone based on its technical prowess alone. Smartphone market is maturing, technologies are converging, and all of the major contenders offer what is essentially the same set of core features. Droid’s long list of features definitely buys it an entry ticket into a top-tier smart phone arena, but in order to rise to the top a phone must also appeal to the subconscious and have that “gotta-have-it” factor. Unfortunately, this is where the Droid fails miserably. Droid’s industrial design can be best described as a lack of industrial design, with the phone looking (and feeling) like a brick, and with utility of potentially useful features (such as the slide out keyboard) diminished by poor execution. This phone invokes flashbacks of Wesley Snipes talking on a cell phone in “New Jack City;” go ahead, watch the movie and let me know if you disagree. At the same time, the phone does seem to be rugged and durable, both of which are features not commonly associated with contenders in this market segment. Perhaps Motorola’s aim with this phone was to reestablish their foothold in the market by proving that past quality problems have been overcome, and that the innovation is still alive within the organization. If so, then Droid definitely hits the marks, but it also needs to be quickly followed by a second act in the form of a phone that people will actually *want* to buy. There are two parts to dominating any market, with the first being attracting the customer and the second keeping the customer – and when it comes to attracting the customer no one comes even close to Apple. Being in the technology business, I am able to see past Apple’s shiny facade and realize that the underlying product is quite frankly not that good. I would never (again) buy an Apple product, but strangely enough I still find myself having to resist the temptation - which serves as a prime example of Apple’s branding/marketing prowess. Apple seems to be the only company that truly understands the importance of a phone as a personal accessory, and they have been able to capitalize on that concept generously. Going back to Droid, and looking at the entire $100mil marketing campaign surrounding its launch, it is clear that this was never a campaign aimed at securing the top spot in this segment of the smart phone market. Apple brand is simply too strong to be dislodged from the top spot based solely on technology. Instead, this campaign seems to be aimed at ensuring that Droid fills the #2 spot comfortably by providing a viable alternative to the iPhone and a solid platform to which disgruntled iPhone owners can migrate. Overtaking Apple would require a broad market appeal that this phone simply does not have – an appeal that might have been further limited by the techno-nerdy “Droid Does” campaign, regardless of its effectiveness.
In conclusion, I seriously doubt that current sales levels of 250K units per week are sustainable. Early-adopter propensities of techno-oriented crowd are not to be underestimated, but they are by no means an indication of long term success. Once the dust settles, Droid is essentially just another example of a smart phone that lacks the differentiating factor that would set it apart from the competition (perhaps they can focus on Droid’s ruggedness? I am being sarcastic...). I would not at all be surprised if the Droid starts to feel sales pressure from cheaper Android-powered devices in the long run.

Ratnok

November 18, 2009 12:32 AM

I agree with Gerrrg. Android simply CAN'T fail because it's supported by Verizon, Sprint, T-Mobile, HTC, Samsung, Sony, Motorola, Dell, and many more to come. It's a tidal wave that can't be stopped. Apple is just one company. The app market fragmentation is a definite concern though, as I have already seen comments by Droid and Hero users about incompatibility. Also, Google needs to stop releasing different versions on different handsets and carriers. If 2.0 is done, then all phones should get it, at the same time.

KM3Group

November 18, 2009 1:11 AM

The Moto Droid is actually a very good device. However the 2 best things about it are: Android and Verizon. The 2 worst things are: Motorola's reputation and the unergonomic physical keyboard. Since both Android and Verizon are available to many manufacturers, (see HTC Eris Droid VS Moto Droid), Motorola is going to be challenged to meet their 3.25 million target. And if Apple ever manages to sign a deal with Verizon - its Game Over.

B.T.W. Whatever happened to the speculation that Google was going to buy out Motorola's handset division?

motosith

November 19, 2009 1:10 AM

The Motorola DROID is a hell of a Mcombination HW wise. It fused the best dsp in the game - TI OMAP and the best modem guys - QCOM.
Its hard to beat in terms of raw performance. Give it up guys.

SW wise its on an open platform. not restricted to the whims and fancies of any single crack head ceo... I mean multiple crack heads are better than any lone c h. Stuff is just one upgrade away.

iPhone - I don't know what that is because never owned one... so no bad or good comments on it as a smartphone. Judging by its success its gotta be a great phone. I have seen the UI to be fantastic. But then hey, time marches on... WOW pretty soon morphs to 'so what - show me the money'...

if its the iPod drag queen then - I hate its UI as a nerd and non-conformist. hey, for some subjective opinion my wife owns an ipod for 2 years and she has used it for a total of ehm... 30 days outside of an ipod dock. It just sits there. could as well be a boombox - yeah you know what I mean.

Me? I sticks to CDs and DVDs but I now have the droid for 2 weeks and I have used its music player ( which isnt too great inUI features ) everyday! who cares about its UI - ( and you have got to check out its youtube in hd - mind boggling) - it blasts fantastic acoustics through my sound system. The ipod does too but what a pain to use with its wheel and all.

So if you go by performance i.e on the dance floor, droid beats the heck out of anything in the market. Well that's the bottom line for strong volume moving forward.

Ipod/Iphone can take the red carpet to the dance floor but the Droid is the "talk to the hand" TERMINATOR. Yeah you can actually talk to my droid to get things done...

Of course, for the ladies who want the frills and the pink confetti you always have the Eris (nice try) or Behold or even the iPhone for that matter.

Droid's got the mojo moving forward ppl.

Also what the heck is the fruit company doing... manufacturing and marketing celll phones and laptops?!?!? Imagine the fight it can give to Microsoft if there is an iphone from lg, sammy ( go sammy ), moto and nokia... Apple needs to just stick to its knitting - superior sw and UI and services... don't ruin it with sucky hw... well thats where google has the advantage - its survices on pure byte streams - simple.

did I mention Motorola Droid is on Verizon... yeah - you can extract every micro-cent of your data plan.

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About

Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.